Taxpayer-funded charities are being used as “fronts” by the Government to hide
the true extent of public spending, a leading think-tank will say today.

In a new report, the Institute of Economic Affairs will argue charities have become a “shadow state”, because they are so reliant on around £12 billion a year of public grants and contracts.

The paper also reveals the Government is now spending millions of pounds on “lobbying itself” because taxpayer-funded charities have hired so many public affairs and media advisers.

It will say charities are less likely to criticise the Government if they are taking taxpayer cash, which can "give the illusion of grassroots support” for certain policies.

"These state-funded activists engage in direct lobbying of politicians and indirect lobbying of the public using taxpayers’ money, thereby blurring the distinction between public and private action,” it says.

The report claims 27,000 charities are reliant on Government cash, including those campaigning for issues with “no widespread support” such as foreign aid and temperance.

“Many so-called ‘charities’ are little more than fronts for state-funded campaigns or providers of state-funded services,” it says.

Christopher Snowdon, author of the report and a research fellow at the IEA, argues that charities often waste the money they are given on lobbying the Government for political ends.

“It is appalling that for so long the government has got away with debasing the term ‘charity’,” he said. “It is vital that more transparency is introduced so the public know exactly what the government is funding. We also need much greater measures to prevent government squandering our money on trying to manipulate our opinions and behaviour.”

The reports calls for an immediate end to unrestricted grants to charities and more limits on political lobbying by the voluntary sector.

It also argues for organisations to be stripped of the name “charity” if they receive substantial funds from the Government.